Afren Increases Stake in Madagascar Block

Afren announced that Government approvals have been received for Afren to assume operatorship and increase its interest in Block 1101, onshore Madagascar, to 90 percent. and a revised work program agreed.

Highlights

Work program of first two exploration phases now combined, with an additional 150 km of 2D seismic to be acquired

Undertaken to drill one commitment exploration well; drilling now planned in 2012

Block overview

Block 1101 is located on the Eastern flank of the Ambilobe basin in Northern Madagascar. The Block encompasses an area of approximately 14,900 km2 onshore and lies adjacent to ExxonMobil's Ampasindava Block. The formation of the Ambilobe basin and the corresponding stratigraphic suites are closely related to the break-up of Gondwanaland and the later separation of eastern Gondwana. There are proven, large heavy oil accumulations in the Isalo formation in Central Madagascar (Bermolanga and Tsimiroro) which attest to the prospectivity of the region.

Some 220 km of 2D seismic was acquired over the block in 2008, identifying three major structures each close to existing wells with recorded oil shows. A working hydrocarbon system on the block is further evidenced by surface oil seeps.

Terms of reassignment and work program

Under the agreed terms of reassignment, Afren has increased its overall participation in Block 1101 to a 90 percent. operated interest through the reassignment of a 50 percent. interest previously held by Candax Energy, who remain partners on the block with a 10 percent. interest. Government approvals for the reassignment have been received and a revised work program agreed with OMNIS, the state oil and gas agency. The agreed work program has combined the first two exploration phases on the block and requires the drilling of one exploration well to a minimum depth of 1,600 meters. The partners have also agreed to acquire an additional 150 km of new 2D seismic. Under the revised ownership structure and work program, it is expected that drilling will now commence in 2012.

Osman Shahenshah, Chief Executive of Afren plc commented, "We see tremendous prospectivity in Madagascar and now, as operator, are keen to explore our high potential acreage. We are grateful to OMNIS and the Malagasy authorities for their endorsement and approval of this transaction and extended work program. We look forward to collaborating with our hosts and partner Candax in the ongoing exploration at Block 1101, and to further establishing Afren's long term commitment to this exciting exploration play."